Doctor's Assoc., Inc. v. Weible, 92 F.3d 108 (2d Cir. 1996) (quoting Baskin v. Hawley, 807 F.2d 1120, 1129 (2d Cir. 1986)), cert. denied, 136 L. Ed. 2d 713, 117 S. Ct. 767 (1997); see also Samuels v. Air Transport Local 504, 992 F.2d 12, 14 (2d Cir. 1993). The movant cannot simply argue that the evidence "was thin," Song v. Ives Laboratories, Inc., 957 F.2d 1041, 1047 (2d Cir. 1992), but rather must show that "'there can be but one conclusion as to the verdict that reasonable [persons] could have reached'" id. at 1046 (quoting Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970)). A court must view the evidence in the light most favorable to and draw all reasonable inferences in favor of the non-moving party, and is not permitted to weigh the evidence or assess witness credibility. Bergstein v. Jordache Enterprises, Inc., 1996 U.S. Dist. LEXIS 6894, No. 90 Civ. 1461, 1996 WL 271910 at *1 (S.D.N.Y. May 21, 1996); see also United States ex rel. Evergreen Pipeline Constr. Co. v. Merritt Meridian Constr. Corp., 95 F.3d 153, 164-65 (2d Cir. 1996) (under Rule 50(b), both appellate court and district court must view evidence in favor of non-movant, giving non-movant benefit of all inferences, and may not weigh evidence or credibility of witnesses). For this Court to uphold the jury's verdict against Warde under § 10(b) and Rule 10b-5, there must be record evidence that: 1) Downe was in possession of material, non-public information regarding Kidde; 2) Warde traded in Kidde warrants while in possession of the information relayed to him by Downe; 3) Warde knew or should have known that Downe had violated a trust relationship in passing on the information, and 4) Downe personally benefitted from his disclosure to Warde. See Dirks v. Securities and Exchange Comm., 463 U.S. 646, 654-664, 77 L. Ed. 2d 911, 103 S. Ct. 3255 (1983). To uphold the jury's verdict under § 14(e) and Rule 14e-3, there must be evidence of the first three elements, but personal benefit to the tipper is not required. United States v. Chestman, 947 F.2d 551, 563 (2d Cir. 1991).

A. Downe's Possession of Material, Non-Public Information

Drawing all inferences in the SEC's favor, there was more than ample circumstantial evidence from which the jury could reasonably conclude that Downe possessed material, non-public information. During early June 1987, when Sullivan was exploring restructuring or a leveraged buyout with Bear Stearns, Downe purchased 52,000 publicly traded warrants to purchase Kidde common stock at $ 40 per share, allegedly on the advice of his broker, Milton Weinger. PX 61, 62; Tr. 173. These warrants expired in November 1987, less than six months later, guaranteeing that their sale would place Downe squarely in violation of the short-swing profits rule. Downe, fully aware of this prohibition, Tr. 242-43, sought to evade the rule by purchasing warrants in securities accounts of a company owned by his son, Educated & Dedicated Service Corp., and in a Bermuda company he jointly owned, Broadsword, Ltd. Tr. 139-40, 148-49, 243. Indeed, Downe violated the short-swing profits rule when he sold the warrants during June 1987 at a profit of approximately $ 43,000. Tr. 169. Downe's attempts to conceal his purchases from the SEC supports an inference that Downe was in possession of inside information when he made these trades.

Downe made substantial purchases of Kidde warrants over the next month and a half, totaling over $ 4 million. At trial, the SEC established that the timing of Downe's purchases coincided with contact between Downe and Sullivan immediately following major developments in the takeover process. On Sunday June 28, Sullivan, in a departure from his usual business practice, met with Bear Stearns representatives at his Easthampton home to discuss the potential takeover and Sullivan's options to sell Kidde. Tr. 105-06. He visited Downe in Southampton later that day, and was visibly depressed. Tr. 176. Although Sullivan and Downe denied that any material, non-public information was imparted to Downe, it was Sullivan's practice to keep Directors such as Downe informed of developments at Kidde between formal board meetings, Tr. 69-70, 100-01, and in addition, the two men were close friends. Sullivan, at this point, was facing the loss of a company of which he had been President for over twenty years, and was meeting with a good friend and Kidde Director literally moments after receiving bad news about Kidde, circumstances that strongly suggest that Sullivan and Downe discussed Kidde. That evening, Downe directed his broker to purchase $ 750,000 in Kidde warrants for Educated and Dedicated, his friends' accounts,
*fn1"
as well as directing his partner David Salamone to buy warrants in the offshore Broadsword accounts. Tr. 178-80. Like his prior purchases of Kidde warrants, these purchases were designed to conceal his involvement, and, Downe testified, displayed a "guilty conscience," because the sale of these warrants would again place Downe in violation of the short-swing profits rule. Tr. 149, 167. This circumstantial evidence supports a reasonable inference that despite Sullivan's and Downe's denials that Sullivan gave Downe inside information, such information was indeed disclosed to Downe.
*fn2"

Sullivan began to contact Directors during the week of June 29 when Kidde began negotiations with prospective buyers to schedule an emergency board meeting to discuss the takeover. Tr. 109-10. Sullivan testified that although it was his practice to keep Directors up to date between meetings, he did not recall speaking directly to Downe about a potential merger prior to the meeting. Tr. 101. The following weekend, Downe borrowed $ 1 million from Charlotte Ford on behalf of David Salamone, so that Salamone could purchase more Kidde warrants for the Broadsword offshore account. Tr. 190-91. Downe personally guaranteed the loan even though Salamone had failed to repay an earlier loan from Downe of approximately $ 800,000. Tr. 192. That Monday, July 6, Downe directed Salamone to purchase $ 2 million of Kidde warrants for the Broadsword account, and placed an order with his broker for the purchase of Kidde warrants for his friends' accounts. Tr. 171-72, PX 63-65. Kidde's public announcement that it was considering restructuring or buyout options occurred the following day, July 7. PX 6. Significantly, by this point Downe had purchased millions of dollars of Kidde warrants that would be worthless in a matter of months unless sold or exercised. The size of this risk strongly suggests that Downe was aware that the value of Kidde common stock would continue to rise in the near future.

Downe's final warrant purchases occurred after he attended two board meetings on July 7 and 10 where nonpublic developments at Kidde were discussed. PX 8, 10. He then purchased additional warrants for himself and others between July 21 and July 24. PX 65, 66. Kidde's merger with Hanson was announced on August 5.

Applying the standard of Rule 50(b), there is neither an "utter lack of evidence" that Downe possessed inside information, nor does the evidence compel the conclusion that he did not possess such information. Rather, the evidence showed that Downe was a close friend of Sullivan and was a Director of Kidde, had contact with Sullivan at crucial times during the takeover period, and purchased large amounts of warrants at considerable expense and risk to himself either immediately or soon after his contact with Sullivan. This evidence permitted the jury to conclude that Downe possessed inside information.

Finally, Warde himself did not come up with a credible explanation for why he began such a significant run of purchases of Kidde warrants. At trial, Warde initially testified that Downe had told him that Martin Revson "was bullish" about Kidde. Tr. 322-23. He was impeached with his deposition, however, in which he had testified that he had not learned anything about a recommendation from Revson prior to his purchases on June 29. Tr. 323-24. He later testified at trial that he could not remember when he first learned of Revson's recommendation. Tr. 391-95, 426. Moreover, the evidence about the public information on which Warde claims to have relied was certainly in conflict. Warde claimed reliance on a particular article about "takeover artist" Asher Edelman's purchase of Kidde shares, Tr. 392-93, but could not produce it. Warde also vacillated about other sources of public information upon which he allegedly relied prior to purchasing Kidde. Tr. 322, 430. In light of these inconsistencies, the jury was entitled to discredit Warde's testimony. The remaining circumstantial evidence presented by the SEC is sufficient to support a reasonable conclusion that Warde traded in Kidde warrants while in possession of confidential information he received from Downe.

C. Warde's Knowledge of Downe's Confidential Relationship

Although Warde denied knowing that Downe was a Director of Kidde, and Downe denied informing him of that fact, circumstantial evidence also supported this element of the SEC's case. Warde testified that his practice was to learn the names of the directors and senior management before purchasing stock in a corporation. Tr. 277-78. In fact, after evasively responding to the SEC's query as to whether knowing the identities of board members was "important" to him ("I don't know how to relate to word 'important'", Tr. at 277), Warde was confronted with his deposition, at which he testified, "I love to check and see if anybody's on the board that I might have heard of, the reputation of management and the board." Id. Warde also routinely reviewed a company's public filings, Tr. 278, which, in the case of Kidde, identified Downe as a director.
*fn4"
PX 55. Warde had approximately eight weeks between the time when his interest in Kidde was piqued in April or May 1987 and his initial purchases in late June 1987, which was more than enough time for him to follow his usual practice.

In addition, Warde and Downe were friends who often discussed business when they were playing cards, and admittedly discussed Kidde, at times at Warde's initiative. Tr. 135, 179, 315, 346. Warde first asked Downe in mid-May about Sullivan's health and plans for retirement. Tr. 305-07, 315-18. Although Warde argues that these inquiries were entirely innocuous because Warde knew that Downe was friendly with Sullivan, Tr. 286-87, an equally reasonable inference is that Warde inquired of Downe because he was aware that Downe was a Director of Kidde. While Warde is correct to suggest that a harmless inference could be drawn, either inference is permissible. The responsibility to draw the proper inference belongs to the jury at trial, and not to the Court. Moreover, the jury was permitted to discredit Warde's and Downe's testimony with respect to Warde's knowledge that Downe was a Director. In so doing, the jury could reasonably infer from the circumstantial evidence -- that the two men were friends, discussed Kidde specifically and the stock market generally, that Warde's usual practice was to research companies and his deviation from this practice was unexplained -- that Warde knew or should have known that Downe stood in a position of trust with respect to Kidde.

D. Personal Benefit to Downe

With respect to this element, little need be said. A benefit to the tipper can be shown, inter alia, by the relationship between the insider and the recipient in which the tip is part of an exchange of benefits, or can constitute the benefit enjoyed by the giver of a gift. Dirks, 463 U.S. at 663-64. Here, Downe testified that Warde had mentioned Golden Nugget and Bank of America to him. Tr. 137. While Warde argues that this comment could hardly have been a recommendation from Warde or a quid pro quo exchange, Downe later invested approximately $ 1.4 million in Golden Nugget securities. PX 29-32. Moreover, Downe testified that "it was ego" that motivated him to invest his friends' and relatives' money without financial compensation. Tr. 138-39. From this the jury could reasonably infer that Downe enjoyed the benefits of being viewed as a successful investor in the eyes of his peers -- including Warde -- as well as the gratification of bestowing the "gift" of his investment expertise.

E. Gregory Warde

Warde argues that insufficient evidence supported the jury's finding that he tipped his half-brother, Gregory Warde, who also invested in Kidde warrants. This contention is without merit. Gregory Warde testified that Thomas Warde recommended Kidde warrants to him. Tr. 471-78. Prior to investing in Kidde warrants, Gregory Warde had never purchased the warrants of any company, rarely traded securities, and invested primarily in mutual funds. Tr. 458, 467. He admitted in his deposition that he did not know what warrants were before he purchased Kidde warrants. Tr. 476-77. Despite making a substantial profit from this investment, at the time of his deposition eight years later, he had never invested in warrants again. Tr. 478. In addition, the timing of Gregory Warde's purchases paralleled Thomas Warde's receipt of information from Downe and his purchases of Kidde warrants in July 1987. See Tr. 475-78. From this evidence, the jury could reasonably conclude that Warde tipped Gregory Warde.

The decision of whether and at what rate to grant prejudgment interest are matters confided to the district court's broad discretion. SEC. v. First Jersey, 101 F.3d at 1477. Warde asserts that he should not be liable for the total amount of prejudgment interest requested by the SEC because the SEC itself was responsible for extensive delays in bringing this case to trial.
*fn6"
This assertion is inaccurate in part and irrelevant in its entirety. First, as a factual matter, Warde and Downe themselves created a substantial delay in the progress of this action, stonewalling the SEC's investigation by asserting their Fifth Amendment privilege until 1992. Second, the Court of Appeals has already rejected the argument Warde makes here. In First Jersey, the Court of Appeals found the award of prejudgment interest for the entire period from the illicit gains to the entry of judgment to be appropriate, "even if defendants were correct that the present litigation was protracted through some fault of the SEC." 101 F.3d 1450, 1476-77 (2d Cir. 1996). The Court so concluded because "defendants plainly had the use of their unlawful profits for the entire period." Id. The same result obtains here. Succinctly stated, Warde is not entitled to a 10-year interest free loan in the amount of his illicit profits. Therefore, Warde must pay a total of $ 1,264,501 in interest, based on the Internal Revenue Service rate used for underpayment of taxes.

D. Civil Penalty

Finally, the SEC seeks a civil penalty of three times the illicit profits attributable to Warde's trades in his brokerage accounts and the account of Ann Brockhurst pursuant to the Insider Trading Sanctions Act of 1984 ("ITSA"), codified at 15 U.S.C. § 78u(d)(2).
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In enacting ITSA, Congress sought to remedy the "inadequate deterrent provided by present enforcement remedies for insider trading," and observed that an "injunction . . . serves only a remedial function and does not penalize a defendant for the illegal conduct [and] disgorgement . . . merely restores a defendant to his original position without extracting a real penalty for his illegal behavior." H.R. Rep. No. 98-355, at 7-8 (1983), reprinted in 1984 U.S.C.C.A.N. 2274, 2280-81. The ITSA provides that "the amount of such penalty shall be determined by the court in light of the facts and circumstances, but shall not exceed three times the profit gained or loss avoided as a result of such unlawful purchase or sale." 15 U.S.C. § 78u(d)(2)(A).

While I find that Warde's conduct justifies the imposition of a civil penalty, I do not find that the 300 percent penalty requested by the SEC is warranted. Warde did not attempt to conceal his trades by trading under fictitious names or in offshore accounts; rather he invested in his own accounts and in the account of his wife. He has no prior history of insider trading violations, and his illicit transactions with respect to Kidde, although repeated, involved only one security.
*fn8"

These facts notwithstanding, some penalty must be assessed to deter Warde and others like him from engaging in such conduct in the future. Based on the facts and circumstances, a 100 percent penalty is appropriate. Warde made repeated trades in Kidde warrants, delayed the SEC's investigation by asserting the Fifth Amendment, and gave conflicting testimony throughout the course of the litigation to cover up his fraud. Moreover, he was found by the jury to have tipped his half-brother Gregory Warde. Therefore, while I decline to impose a 300 percent penalty, I impose a civil penalty of 100 percent of Warde's illicit profits.

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